Chain stores are seeing the largest increase in online sales since the temporary lockdown of brick-and-mortar stores, a new report shows, with apparel seeing significant growth.
A new report released by marketing technology firm Bluecore shows that since the temporary closure of stores due to Covid-19, online sales have increased for department stores, chain stores and native direct-to-consumer brands, as well as across the apparel, luxury, beauty, sports/outdoors and pharmacy verticals.
The data reveals that chain stores are seeing the highest increase in online sales (+80%) and the most significant increases in other important KPIs, when compared to department stores and digital natives. With a 119% increase in first-time buyers and 89% increase in second-time buyers, chain stores are experiencing a large-scale migration to their digital channels at an accelerated rate.
Prior to Covid-19, only 15% of brick-and-mortar retailers’ sales occurred on digital channels. That number was widely expected to increase to 50% within three years. Now, it appears the transition may happen in a matter of months.
Bluecore analysed shopper behaviours across 70 brands’ and retailers’ e-commerce sites, spanning 115.9m orders, US$17bn in total sales and across 42.9m unique products. The company compared April 2020 performance to April 2019 numbers, as well as to pre-Covid numbers from February of this year. Bluecore also reviewed other high-value online shopper behaviours, including products added to cart, email click-throughs, sign-ups and products viewed.
Digitally native brands see significant increases across all KPIs, but not as much growth as chain stores selling online. Digital-only brands’ sales are up by 53% compared to April 2019, with a 53% increase in first-time buyers, 38% increase in second-time buyers, 53% increase in product views and a 25% increase in email sign-ups since April 2019.
Department stores see the least online traction, despite a 44% increase in sales since last April. Their decrease in first-time buyers (-24%) and second-time buyers (-37%), compared to last April, suggest that a majority of sales are coming from highly loyal, repeat customers, rather than new first-time or second-time buyers. This could be due to a lack of investment in the types of digital experiences and marketing efforts they would need to win over new shoppers.
Chain stores are seeing the most significant increase in year-on-year sales, which Bluecore says might be due to increased investment in e-commerce and more opportunity to grow online than already established digital natives.
In terms of verticals, apparel has seen a 20% year-on-year increase in online sales and a 27% increase since February. This represents a 43% year-on-year increase in first-time buyers and 78% increase in second-time buyers. Apparel is one of the most mature retail e-commerce verticals, which also means that a lower percentage increase could still represent more sales dollars than higher increases in other retail verticals.
Meanwhile, sports/outdoors brands have seen more focused and “high-intent” shoppers. While high-value activities like “add to cart”, product views and email sign-ups saw a less significant increase than other retail verticals, sports saw a 45% year-on-year increase in online sales and a 77% uptick in second-time purchases. This reveals higher intent buyers with streamlined paths to purchase.
“In normal times, the majority of retail sales are conducted in-store — warranting significant investment in the in-store experience,” says Fayez Mohamood, CEO of Bluecore. “As a result of Covid-19, we’ve been presented with a channel equaliser like never before: an apples-to-apples look at the variance between business models selling e-commerce only, and how each business model is shifting investments in preparation for the inevitable digitally-driven future.”
As brick-and-mortar retailers approach an eventuality where their digital sales account for 50% of their overall revenue, Bluecore says it will become increasingly important for them to focus on digital customer retention, performance, and increasing customers’ lifetime value. Doing so will ensure digital channels become as important or more important than offline channels.